Minnesota’s Moonshot, Part 3: Decarbonizing our electric supply

Posted by Mike Bull | Date February 2, 2018

In previous posts, I’ve shared my thoughts about steps needed to hit Minnesota’s economy-wide deep decarbonization goal to reduce carbon emissions 80 percent by the year 2050. I call it “Minnesota’s Moonshot” because of the heightened intention, broad-based collaboration, intensive planning, and hard work it’ll take to get us there.

I believe our practical pathway to achieving Minnesota’s deep decarbonization goal is through a combination of deep energy efficiency and decarbonized electricity use throughout our economy. Within this, continuing to decarbonize our electric supply will be crucial.

Retireable generation

Thanks to forward-thinking by policymakers and excellent work by utilities, Minnesota has made huge clean energy gains in the last decade, and we stand ready to accelerate that progress. We have a massive opportunity to transform our electric supply over the next 20 years — over 95% of the state’s 2015 power sector CO2 emissions come from fossil-fueled plants that are retiring or retireable in the next 20 years. That’s almost 7,000 megawatts of coal and natural gas-fired generation.

I use the term “retireable” to mean that a particular generation unit will either be fully paid for by its retirement target date; older than the average life span for that type of generation unit, or its power purchase agreement or license to operate will expire. We need an orderly, well-planned transition of our aging generation units, one that’s informed by these metrics, but not dictated by them.

However, it’s also important to note that over 1,700 megawatts of no-carbon nuclear generation (Xcel Energy’s nuclear units at Monticello and Prairie Island) are also retireable in this timeframe, adding to the difficulty of transitioning to an increasingly decarbonized electric supply mix over the next 20 years.

Integrated resource planning

How we decide what to do with retirements and when, will have a huge impact on whether we reach Minnesota’s deep decarbonization goals. In 2019, resource plans will be filed with the Minnesota Public Utilities Commission by Minnesota’s biggest electric utilities — including Xcel Energy, Otter Tail, Minnesota Power, and Great River Energy — that will include evaluation and discussion of the future of nearly all the retireable units I’ve referenced.

Minnesota has long benefited from a robustly integrated resource planning process, which has remained valuable precisely because it has evolved and adapted to current challenges throughout the years. So since 2014, the e21 initiative (co-led by CEE and the Great Plains Institute) has convened stakeholders representing businesses, low-income consumers, renewable energy developers, regulators, clean energy advocates, utilities of all sizes and types, and others. Together we learn, discuss, and consider the best possible utility business model and regulatory framework evolutions to address changing industry dynamics, such as low load growth, reductions in wind and solar costs, increasing amounts of customer-side generation, historically low natural gas costs, and how to modernize an aging utility infrastructure.

We brought together 18 Minnesota energy experts, including resource planners from our major electric utilities; these folks spent much of 2015 working through potential modifications to the state’s planning processes. Through the working group and broader e21 consensus, we developed a 2016 whitepaper with 14 potential modifications to improve resource planning.

I’ll highlight four:

Integrated Systems Planning. As technology improves and consumers take charge, there is more action on the customer side of the meter. To better account for customers’ key role, we endorsed an end-to-end approach called Integrated Systems Planning. In one example, the Sacramento Municipal Utility District (SMUD) completed a comprehensive long-range forecast of customer adoption of distributed energy resources on their system, to help identify the net load the utility will need to serve going forward, and to provide potentially critical information about its customers and how the distribution system could evolve to meet customer needs —we should start doing similar things in Minnesota.

Modeling. Strategist (the capacity expansion model used by Minnesota’s regulators and utilities) has served us well, but our group questioned whether Strategist can provide a full picture of demand-side resource opportunities like energy efficiency, and thought that other types of supplementary modeling software might be needed. We’ve since learned that Strategist’s vendor will stop supporting the model soon, so utilities are getting input from regulators and intervenors on a new modeling package that we hope will build on the best of Strategist, while doing a better job of handling a more comprehensive range of opportunities.

Stakeholder collaboration. We believe that seeking stakeholder collaboration and input early in the development of a resource plan — especially regarding assumptions, scenarios, and sensitivities to be modeled and evaluated — would be good for a number of reasons. By engaging early with stakeholders who might likely intervene in a resource plan, we hope to find common ground while reducing the plan’s regulatory burden.

Statewide conference.We suggested that the Minnesota Public Utilities Commission (PUC) or the Department of Commerce hold a statewide Resource Planning Conference every other year, to facilitate the sharing of best practices and planning innovations from one utility’s resource plan to the next. We believe this kind of gathering could resolve issues that impact all utilities as they develop their resource plans. Holding the first resource planning conference in 2018 could be hugely helpful, given how important 2019 will be to Minnesota resource planning.

As we work through the challenges of decarbonizing Minnesota’s power generation, the next big issue in the Minnesota Moonshot will be how and where best to use that decarbonized energy to power areas of the economy that have been typically powered by more carbon-intensive fuels.
Keep an eye out in coming weeks for my thoughts on that.